Nearly 40% of mid-sized businesses in the North East say supply chain issues are the greatest threat to their success over the next six months.

This was followed by rising energy costs, which a third of companies shared was their biggest concern, according to new research by accountancy and business advisory firm, BDO. 

The bi-monthly Rethinking the Economy survey of 500 leaders of medium-sized businesses found a third of businesses in the region are planning to grow their workforce currently but are struggling to find talent with the right skills.

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The research found 20% of companies in the region are planning to raise salaries by 9% or more in line with current inflation rates to support staff with the cost of living crisis and a further 53% of companies in the North East plan to boost salaries by 4-8%.

Aside from changes to salary, 63% of North East businesses will provide other benefits in kind to help employees, such as shopping vouchers, childcare support, free travel or meals while at work.

Michael Stallard, partner at BDO in the North East, said: “Companies continue to face extreme challenges and this is placing a real squeeze on finances.  Despite this, there’s a clear ambition to continue to grow headcount and support their teams with a pay rise or other benefits.”

Companies in the region are also looking towards innovation to counteract the impact of inflation with 40% saying they will launch new products or service or introduce new systems to increase efficiency and reduce costs across their business. Unfortunately, 47% of businesses also shared they are utilising overdraft facilities as a response to the current inflation challenges.

Michael added: “It’s hugely encouraging - but not surprising given the entrepreneurial spirit in the region - that businesses here are responding to current rates of inflation by rethinking their operations and innovating.

"However, companies are also having to rely on overdrafts and taking on more debt so it shouldn’t be underestimated the level of challenges being faced by businesses.”


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